Correlation Between Shemen Industries and Enlight Renewable

Can any of the company-specific risk be diversified away by investing in both Shemen Industries and Enlight Renewable at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shemen Industries and Enlight Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shemen Industries and Enlight Renewable Energy, you can compare the effects of market volatilities on Shemen Industries and Enlight Renewable and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shemen Industries with a short position of Enlight Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shemen Industries and Enlight Renewable.

Diversification Opportunities for Shemen Industries and Enlight Renewable

0.31

Correlation Coefficient

Shemen Industries  Enlight Renewable

Weak diversification

The 3 months correlation between Shemen and Enlight is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shemen Industries and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy and Shemen Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shemen Industries are associated (or correlated) with Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of Shemen Industries i.e., Shemen Industries and Enlight Renewable go up and down completely randomly.

Pair Corralation between Shemen Industries and Enlight Renewable

Assuming the 90 days trading horizon Shemen Industries is expected to generate 1.0 times more return on investment than Enlight Renewable. However, Shemen Industries is 1.0 times less risky than Enlight Renewable. It trades about 0.01 of its potential returns per unit of risk. Enlight Renewable Energy is currently generating about 0.0 per unit of risk. If you would invest  193,900  in Shemen Industries on October 22, 2024 and sell it today you would lose (5,200) from holding Shemen Industries or give up 2.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.74%
Values	Daily Returns

Shemen Industries  vs.  Enlight Renewable Energy

Shemen Industries

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shemen Industries are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Shemen Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Enlight Renewable Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Enlight Renewable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shemen Industries and Enlight Renewable

The main advantage of trading using opposite Shemen Industries and Enlight Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shemen Industries position performs unexpectedly, Enlight Renewable can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Enlight Renewable will offset losses from the drop in Enlight Renewable's long position.

The idea behind Shemen Industries and Enlight Renewable Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.